Novell is buying SuSE Linux. Stephen Shankland reports that Novell has signed to acquire SuSE Linux, with IBM backing it up:

Longtime Microsoft foe Novell has signed an agreement to acquire SuSE Linux for $210 million in cash, while IBM, the most powerful backer of the Linux OS, will make a $50 million investment in Novell. . . .

SuSE is strongest with the open-source software on servers, the networked machines that handle chores such as hosting Web sites and routing e-mail.

The acquisition is expected to close by the end of Novell's first fiscal quarter in January, at which point the IBM investment will become effective, Novell said. IBM plans to buy $50 million of Novell preferred stock.

In addition, IBM and Novell are negotiating an extension to SuSE's agreement to support all four of IBM's server lines and are planning joint marketing and support relationship, the companies said.

Novell--a company that has retained significant rights from its former ownership of Unix--now has a strong vested interest in Linux. SuSE, meanwhile, believes its former alliance with SCO shields it, an assertion SCO denies.

"We chose SUSE LINUX because they are a clear market leader in Linux
technology for the enterprise," Messman said. "With this acquisition, Novell
will be the only billion-dollar software company with a Linux distribution and
a worldwide ecosystem around it. A worldwide technical staff of more than
600 has been trained to support Linux. The acquisition of SUSE LINUX completes
our technology stack from the desktop to the server."

Beyond the technology, the acquisition will also expand Novell's strategic
commitment to the open source community. The combination of SUSE LINUX and
Novell will deliver not only complete enterprise Linux software solutions, but
also worldwide channels and industry-leading partnerships. The combined
company will help promote a thriving, global open source ecosystem that
creates innovation and choice for developers, users and organizations alike.
Novell is firmly committed to open standards and maintaining the existing open
source kernel development efforts. From advocacy and development resources to
events and support of open source efforts like kernel projects, XFree86,
ReiserFS, KDE, GNOME and Mono, Novell stands side-by-side with the open source
community.[emphasis added]

OK, we can exhale now. Except for SCO and Microsoft. Their troubles have just begun.

The press
conference can be heard live at 11:00 EST. The lesson to be learned? You don't want IBM mad at you. They fight to win.

Mike Davis, senior researcher at analyst Butler Group, said Novell had been trying to reposition itself because its NetWare [operating system] was very dated. But he thought IBM's involvement was the most telling element in the deal.

"SuSE became more vulnerable after the SCO Group, which has worldwide offices, pulled out of United Linux. IBM has a great need to maintain viable and strong distributions. So a bit of me says this is directly as a result of SCO's actions," he said.